Any digital currency released in the European Union may not fully replace fiat, said the President of the European Central Bank, Christine Lagarde.

Speaking at an online meeting of the Franco-German Parliamentary Assembly on Sept. 21, Lagarde stated that the bank was exploring “the benefits, risks and operational challenges” of a European central bank digital currency (CBDC), but fiat currency would likely still play a role in this digital future. 

“A digital euro could be a complement to, not a substitute for, cash,” Lagarde stated. “It could provide an alternative to private digital currencies and ensure that sovereign money remains at the core of European payment systems.”

On Sept. 10, the ECB president said the Eurosystem had not yet reached a decision on whether to introduce a digital euro, but said that a taskforce to study the potential effects of a CBDC on Europe would be announced “in the coming weeks.”

Lagarde has long supported the central bank developing a digital euro to address the move towards digitalization. Last September, when she was the head of the International Monetary Fund, the ECB president said she would focus on ensuring EU institutions adapt to the changing financial environment by being open to crypto.

However, Lagarde highlighted that the European economy was facing an “unprecedented crisis” with the current pandemic. The ECB president said recovery was “uneven and incomplete” and would all be dependent on how well the virus could be contained.